When debating the virtues of a capitalist or libertarian society, one can extol the benefits of private property, free exchange and non-violence. Most of the nagging questions – “how would police work in a free society?”; “how would we regulate unscrupulous companies?”; or the now-clichéd classic “who would build the roads?!” – can be dealt with fairly straightforwardly and it is not difficult to show how such a society would deal with these matters in a vastly superior way to one that is imbibed with statism.

However, there is one question that always presents a seemingly insurmountable difficulty – what would happen to the poor? By this, we do not mean the accusations of a free economy being “sink or swim” or “dog eat dog” which can also be disposed of fairly easily. What we mean is the fact that a free world would have no “official” institution or “social safety net” to help those who were genuinely less fortunate. A libertarian might mumble a few words about the importance of charity but with an outright declaration by one’s opponent that such a system is necessary, one may be tempted to concede that this is the Achilles’ heel of a libertarian society1.

It is high time that libertarians took the offensive against such a criticism and turn this apparent weakness into an advantage. In the first place, the question depends very much on how we are defining “the poor” – absolutely or relatively. In an absolute sense, the first hurdle to jump over is the criticism that capitalism is actually the cause of poverty. This is nonsense. Poverty is the state of humans in nature. When the first person walked the earth the only tools he had available were his bare hands. There is no “capitalist” system to speak of and his lack of food, shelter, clothing, and anything even remotely enjoyable in life is because nature dealt him this hand. Capitalism, that is, the accumulation of capital, is what moved him away from this state of nature and allowed him to enjoy hitherto unimaginable riches. On the eve of the industrial revolution, 85 percent of the world’s population survived on less than a dollar a day in today’s money. That figure is now down to 20 percent2. Blaming capitalism for the remaining poverty and “inequality” is like blaming a treatment for cancer for “only” curing 80 percent of cancer cases. The conclusion one would draw from such statistics is not that the treatment should be abandoned but rather that it should be extended to the remaining 20 percent as quickly as possible! One answer to our problem of what to do about the poor is, therefore, to say that capitalism will simply make poverty irrelevant, an evil vanquished and consigned to the pages of history books. And it is precisely those areas of the world that do not possess the institutions necessary for a functioning of capitalism – strong private property rights and the rule of law – that are still mired in poverty. Furthermore, those countries that have experimented with socialism experienced nothing but stagnation, decay, environmental destruction and a permanently low standard of living. So for someone who questions what a capitalist system would do about the poor it is incumbent on that person to explain why he favours a system that would keep the poor very much in poverty.

The more popular argument against capitalism, however, is that it causes relative poverty – that some people get ahead while others are left behind to languish. Apart from acknowledging what we just mentioned – that there are areas of the world where a capitalist system simply cannot flourish – the primary reason regarding one’s own political system is that everything in a given Western country is mind-numbingly centrist. In the UK political division was formerly split between the Tories – representing the preservation of the superiority of the aristocratic, landholding caste – and the Liberals which were born out of the enlightenment. When the liberal philosophy succumbed to socialism after the World War I, the latter marked a seemingly distinct contrast between the interests of businessmen and “capitalists” on the one hand and that of the working class on the other. This continued for the next seventy years until the collapse of socialism in Russia and Eastern Europe left socialism as an empty and unworkable philosophy. Beginning with the Thatcher era and culminating in the Blair Government, the ideological shift was to the centre – that, not any more was it “the workers” vs. “the bosses” but, rather, Government would allow business to pursue profit while preserving the welfare state and the nationalisation of certain industries such as healthcare. What has resulted, therefore, is a very rich strata of society and a very poor strata of society both supported by the Government, and ultimately all paid for by the middle classes. It is this “corporatist, welfare state” that has caused the bifurcation of wealth rather than any vestige of that system that could be referred to as capitalist. We have already seen in the 2007-8 financial crisis how the rich – usually connected with a financial system propped up by the legalised fraud of central banking and fractional reserve banking – rather than suffering losses are bailed out when they make huge entrepreneurial errors. Their gold-plated situation is one of “profit & profit” rather “profit & loss”, increasing the propensity to gamble recklessly and plough scarce resources into loss-making ventures. At the opposite end of the scale the poor are also bailed out of their situation, increasing the attractiveness of unemployment, consumption over saving, and the dissolution of traditional institutions such as family and friendship. The net result of all of this is a permanent rich and a permanent poor, all supported by the state and, ultimately, the middle earners who are not “too big to fail” but also not poor enough to receive government welfare handouts. This is the real cause of the inequality between rich and poor in the Western world today – that the gap is mandated by the extant political system – and not by capitalism.

A capitalist system, in contrast, would be strikingly different. In the first place, the rich can only stay rich by continuing to devote the scarce capital goods to the ends that are most urgently desired by consumers. No bailouts, no socialisation of losses. But also the whole purpose of a capitalist system is mass production for the masses. It is not a system of trading phantom assets denominated in paper money. It is this mass production that extends what were once the luxuries of the rich to the rest of society. In the pre-capitalist era, a rich man may have had a horse and carriage and the poorer man may have had nothing and would have had to walk. Today, the difference is that the rich man may have a Ferrari and the poorer man a VW Polo. But at least now they both have a car. Whereas before the difference was one of how quickly it would take one from get from A to B, the remaining difference is simply one of comfort and style. The relative gap has, therefore, narrowed. All around us we see a shortening of the time from the development of a luxury item to its dissemination amongst the wider population. It took several decades from the invention of the computer before every house and office had a PC; yet the Smartphone revolution has taken only a few years. As capital becomes more ubiquitous, therefore, the result is a practical narrowing of the gap between rich and poor.

Having pretty much explained why the poor would be far better off under a capitalist system than under a collectivist one, what of the fact that there is no formal institution for helping the poor? Here, people too often jump to the virtues of the welfare state while undermining those of a world without it. As we noted above it is precisely because there is a welfare state that the relative importance of other institutions such family, friendship and the local community become less important. After all who needs to rely on friends to help you out in your hour of need when the state will do it all instead? Without the state to bail one out however, such institutions are likely to flourish. The irony is that, under a capitalist system, the very selflessness and altruism that its critics say is destroyed by capitalism would in fact receive an almighty boost! The capitalist system is simply one of human co-operation; its just that this co-operation is voluntary rather than enforced. People do not simply stop co-operating because they aren’t forced and when the relationship is voluntary it leads to human beings that are more understanding, caring and friendly towards their social counterparts rather than the bitterness, hatred and resentment that results from mere force.

Critics of capitalism should therefore be met head on with the facts that a free economy a) reduces absolute poverty by allowing production for the masses to be unleashed, b) reduces relative poverty by permitting luxury items and innovations to be mass produced, and c) encourages family, friendships, empathy and understanding between human beings who will be more likely to help each other out when they are in genuine need. Given all of that, it becomes incumbent upon the statist to explain why he favours a system that preserves poverty and creates a society of selfish, bitter and uncaring individuals.

1A curious aspect of political debates where liberty is pitted against some form of collective is that liberty is subject to a paralysing degree scrutiny to which its opposing philosophy is not. If libertarianism shows a single morsel of uncertainty when answering how it would solve a particular problem it is declared to be unworkable and impractical, regardless of how many other areas in which it is shown to be beneficial. Yet people happily support and vote for political parties in spite of disagreements with particular aspects of their manifestos.

Much of the pro-Liberty movement, including the present author, seems to focus on the role of education in being the prime driver towards a world free of state violence and coercion. We believe that informing people of the true nature of the state (i.e. no better than a band of thieving thugs) will incite people to embrace freedom and reject government intervention.

However, a great deal more thought needs to be turned to whether, rather than people wilfully and decisively rejecting government, the “revolution” will come about through a seemingly more mundane and passive method – that of simply making anything that government does irrelevant.

We are already bearing witness to several instances of this. The internet, and the increased accessibility to the world wide web through portable devices, renders almost inert any government attempt to control information, the whole Wikileaks saga perhaps being the most profound testament to this. Indeed it is possible to suggest that the average person today has quicker and better access to information than Presidents Reagan, Bush and Clinton did a mere twenty to thirty years ago. Added to this is the infancy of virtual currencies such as Bitcoin and Litecoin demonstrating how it is possible to curb government currency and capital controls and render physical borders irrelevant. In spite of the fact that virtual currency appears to be far from perfect in these early days, one cannot overlook the promise that their idea if not their present execution holds for the future. And in the United States 3D printing seems to be taking the bite out of gun control.

The marvellous thing also is that these mini-revolutions occur without violence and bloodshed – there is no fighting, no overthrow and no killing. Indeed this is not unusual as previous civil strife and conflict has not been about government per se but, rather, over who controls the government. The struggle of the twenty-first century, however, is over getting government out of the way entirely, regardless of who is in charge of it. We should not be surprised, therefore, that there will not be one big and violent revolution to overthrow government for ever but, rather, hundreds of small, decentralised and peaceful revolts that will simply cause government to wither away in helplessness.

This is not to suggest, of course, that government will not fight back in these areas; indeed governments, as they start collapsing from over-borrowing, overspending and eventual bankruptcy, will try ever more desperately to enforce increased controls and pluck all of the remaining feathers from the golden geese of their citizenry. But the more those geese are plucked the more they flap towards an escape and independent individuals have, historically, been better at what we might call the “invention of circumvention” than the government has been at stopping it.

But let us focus on the one area of government that is both its method of function and, according to the beliefs of the average Joe, it’s raison d’être – violence. Government commits its horrendous abuses and enriches its participants through the use of force against others. But is also supposed to protect the common citizen from the use of force by others and this is why government is still regarded as necessary. What if, then, an invention would enable any person, at extremely low cost, to protect his or her person and property from all forms of force? I have very little idea as to what this could be – an invisible force field around each object you own, perhaps? This is a matter for the genius of inventors. But imagine the result – in one swoop you would eliminate both the ability of government to tax, steal, imprison, kill, maim and live off the fat of everyone else and you would completely eradicate its reason for existence. For if people can now protect themselves from invasion of their person and property at very low cost, why bother with government? Why would anyone pay taxes for an army or police force when this new, cheap, method prevents the very reason for their existence? Of course, people may continue to pay “taxes” voluntarily for some service that the current administrative set up may be perceived to be providing. But there is nothing wrong with this if that is what people want to do with their own money. The bite of force, however, will be lost and government will be relegated (one might say promoted) to the same level of every other market player – having to offer people a valuable service in return for its voluntarily paid revenue.

We should, therefore, urge all inventors to dust off their drawing books and get working on such a marvellous invention. It may, quite literally, save the world before it drowns in a sea of statist despotism.